Camtek's Q1 FY2026: Solid Performance with a Strong Second Half Outlook

Camtek reported Q1 FY2026 revenue of $121.7 million, slightly ahead of the $120.2 million estimate, marking a 1.3% surprise. EPS came in at $0.70, beating the $0.68 estimate by 2.3%. While the beat is positive, the sequential decline in revenue from $128.1 million in Q4 FY2025 (-5.0%) and the year-over-year growth of only 2.5% indicate a slower quarter.

The company's gross margin for the quarter was 50.1%, down from 51.0% in Q1 FY2025. Operating income was $31 million, with an operating margin of 25.5%, down from 31.5% in the same period last year. CFO Moshe Eisenberg noted, "Operating profit in the quarter was $31.1 million compared to the $37.3 million reported in the first quarter of last year and $36.7 million in the fourth quarter." Despite the decline, the company expects operating margins to return to around 30% in the second half of the year.

Camtek's guidance for Q2 FY2026 is between $129 million and $131 million, indicating a sequential growth of 5.9% to 8.4%. This guidance suggests a return to growth after the slower Q1.

More importantly, the company expects a significant surge in revenue in the second half of 2026, with revenues expected to be over 25% higher compared to the first half. Rafi Amit elaborated, "In accordance with our new incoming business I mentioned earlier, we can already say that we expect a surge in revenue in the second half of 2026 with over 25% higher revenues compared with the first half with a potential to see additional upside based on timing of orders and deliveries between Q4 2026 and early 2027."

Camtek has secured significant orders that will drive future growth. Rafi Amit highlighted, "To provide additional color, we have already received order and forecast from 2 HBM manufacturers for our 3D metrology and 2D inspection steps, representing expected revenue exceeding the amount of $260 million for 2026 and 2027." This order, along with other incoming business, positions Camtek well for the second half of the year and beyond.

The company's total addressable market is expected to grow to over $2 billion in 2027, driven by these orders and the expansion of its product portfolio.

Camtek's financial health remains strong, with cash and cash equivalents, including short- and long-term deposits and marketable securities, totaling $850 million as of March 31, 2026. However, accounts receivables increased to $131.7 million from $90.8 million in the previous quarter, impacting cash generation.

Despite the increase in accounts receivables, the company's strong cash position provides a buffer for future investments and growth initiatives. Moshe Eisenberg added, "Due to timing of collections, accounts receivables went up to $131.7 million compared with $90.8 million in the previous quarter, which resulted in a lower cash generation this quarter."

Camtek's new machines, the Eagle G5 and the Hawk, are driving significant growth. In the first year of introducing these products, 30% of the company's revenues came from these new machines. Rafi Amit stated, "In the first year of introducing our Eagle G5 and the Hawk, 30% of our revenues came from these new machines and we plan to at least double in revenues the sales of these 2 products."

The company expects these new products to continue driving growth in the coming quarters. Shane Brett noted, "But if we just take your second half guidance, it does imply your HPC revenue should grow closer to 20% year-over-year." This growth is a testament to the company's ability to innovate and meet the evolving needs of its customers.

Camtek's strong relationships with key customers, including TSMC, ASE Group, Samsung, and SK Hynix, are crucial for its growth. The company's advanced packaging inspection solutions are particularly important for these customers, who are investing heavily in advanced packaging technologies.

The $260 million order from two HBM manufacturers is a significant win and underscores the importance of Camtek's solutions in the advanced packaging market. Ramy Langer noted, "We talked about the forecast about the very important order of $260 million for '26 and '27 order and forecast." This order not only provides a strong revenue stream but also positions Camtek as a key player in the HBM packaging inspection market.

Compared to its peers in the Process Control subsector, Camtek's performance stands out. While some peers, such as 6951.T, have seen a decline in revenue, Camtek has maintained growth. The company's gross margin of 50.1% is competitive, especially when compared to peers like TMO and BRKR, which have gross margins of 40.7% and 47.3%, respectively.

Camtek's guidance for the second half of the year is particularly strong, with expected revenue growth of over 25% compared to the first half. This outlook is more optimistic than many of its peers, who are facing more uncertain market conditions.

The tone of Camtek's Q1 FY2026 earnings call was positive and confident, with a sentiment score of 0.43, up from 0.31 in Q4 FY2025. The guidance tone was particularly strong, with a score of 0.78, indicating a high level of optimism about future performance. CFO Moshe Eisenberg's prepared remarks were particularly positive, with a prepared sentiment score of 0.73, up significantly from -0.02 in the previous quarter.

Full call-over-call delivery metrics are in the tone history.

The company's AI optimism score also improved, rising to 0.45 from 0.28 in Q4 FY2025. While the uncertainty index increased slightly to 47.4 from 42.3, the overall tone of the call was one of confidence and optimism. Rafi Amit's comments about the company's backlog and pipeline, as well as the significant orders received, contributed to the positive tone.

Camtek's Q1 FY2026 results, while showing a slower quarter, are underpinned by a strong financial position and a strong outlook for the second half of the year. The company's significant orders, particularly the $260 million order from HBM manufacturers, and the introduction of new products like the Eagle G5 and the Hawk, position Camtek well for continued growth. The positive tone of the earnings call and the strong guidance for Q2 and beyond further reinforce the company's strong position in the semiconductor equipment market.

For investors, Camtek's solid performance and strong outlook make it an attractive investment in the current market environment. The company's ability to innovate and secure significant orders, combined with its strong financial health, positions it well for long-term success.